Which of These Is a Limitation of Financial Ratio Analysis

question 60

Multiple Choice

Which of these is a limitation of financial ratio analysis?

• A)Suitable yardsticks for comparisons are not always available.
• B)Ratios have a restricted vision as they only assess the past.
• C)Year-end data is not necessarily typical of the position during the year.
• D)All of the above.

Calculate the total amount of fixed manufacturing cost incurred.

Calculate contribution margin per unit sold.

Determine total product and period costs for specific production volumes.

Understand the concepts of direct costs, conversion costs, and prime costs in manufacturing.

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Definitions:

Arbitration

A process for the settlement of disputes whereby an impartial third party or board hears the dispute, then makes a decision that is binding on the parties. Most commonly used to determine grievances arising out of a collective agreement, or in contract disputes.

Automobiles

Motor vehicles with four wheels designed primarily for passenger transportation on public roads.

Caveat Emptor

Latin: “Let the buyer beware.”

Consumer Protection Legislation

Laws and regulations designed to safeguard the rights and interests of consumers against unfair practices by businesses.